Tesla Inc (NASDAQ:TSLA) reported a 14% year-over-year decline in vehicle deliveries for the second quarter, hit by rising competition and boycotts due to CEO Elon Musk’s involvement with the Trump administration.
The company delivered approximately 384,000 units in Q2, slightly below the Wall Street consensus of 385,000 vehicles.
During the quarter, Tesla produced approximately 410,000 vehicles.
Analysts at Wedbush remain bullish on Tesla, noting that following a sales slump in China, the company’s turnaround efforts in the country appear to be paying off.
“While the company has seen significant weakness in China in previous quarters given the rising competitive landscape across EVs, Tesla saw a rebound in June with sales increasing for the first time in eight months reflecting higher demand for its updated Model Y as deliveries in the region are starting to slowly turn a corner with China representing the heart and lungs of the TSLA growth story,” they wrote.
“Despite seeing more low-cost models enter the market from Chinese OEMs like BYD, Nio, Xpeng, and others, the company’s recent updates to the Model Y spurred increased demand while the accelerated production ramp-up in Shanghai for this refresh cycle reflected Tesla’s ability to meet rising demand in the marquee region.”
They believe Tesla will lead the autonomous market in the US following the initial launch of unsupervised full self-driving (FSD) in Austin earlier this month.
“There will be many setbacks....but given its unmatched scale and scope globally we believe Tesla has the opportunity to own the autonomous market and down the road license its technology to other auto players both in the US and around the globe,” they wrote.
“While Musk’s departure from DOGE brought back TSLA’s most important asset, the feud between Musk and Trump brings further frustration to investors with more fear around the Trump administration becoming more hawkish around government-related spending tied to Tesla, especially the autonomous future with AV regulations key for Robotaxis and Cybercabs.”
The analysts repeated their ‘Outperform’ rating and $500 price target on Tesla.
“Tesla's future is in many ways the brightest it's ever been in our view given autonomous, FSD, robotics, and many other technology innovations now on the horizon with 90% of the valuation being driven by autonomous and robotics over the coming years but Musk needs to focus on driving Tesla and not putting his political views first,” Wedbush concluded.
Shares of Tesla traded up 3% at about $309 shortly after US markets opened on Wednesday, but are down more than 23% in the year to date.